Tangled Affair or Fruitful Relationship? Foreign Aid Involvement in the Tourism PoliCy ProCess Case Study of Lao PDR Nadine Fiaux Master Degree Dissertation Tourism Destination Management September 2011 Tangled Affair or Fruitful Relationship? Foreign Aid Involvement in the Tourism Policy Process Case Study of Lao PDR Master Program Tourism Destination Management Master Degree Dissertation September 2011 Nadine Fiaux Student at the NHTV University of Applied Sciences, Breda NL Student ID: 102390 I hereby declare that this dissertation is wholly the work of Nadine Fiaux. Any other contributors or sources have either been referenced in the prescribed manner or are listed in the acknowledgements together with the nature and the scope of their contribution. PREFACE AND ACKNOWLEDGEMENTS Throughout my studies in tourism the area of tourism policy and planning has always interested me. The huge importance that appropriate planning can have on the development of tourism destinations is intriguing, especially after having travelled to many countries and experienced examples of tourism development going wrong first hand. The task that tourism planners nowadays have if they want to develop their destination in a sustainable way is highly complex and challenging and personally I have always liked a challenge. This is the reason why it was clear to me that my dissertation was to be related to the topic of tourism policy, although I had not decided on which facet to investigate. During the fieldtrip we did between February and April 2011 in the Asia-Pacific Region visiting Australia, Cambodia and Bali I fell in love with Southeast Asia making me want to stay in this region for my research. I chose Lao PDR as my preferred destination and started investigating into different possibilities for topics. The donor-recipient relationship and its influence on tourism policy seemed a great topic to investigate even though – or maybe exactly because – there was hardly any literature to be found on this topic. Researching this complex relationship suited me perfectly as it was challenging to look into a sparingly recognised but in my opinion crucial ‘new’ topic. It also allowed me to combine my preference for tourism policy with my passion for travelling and the love I had developed for Southeast Asia. I am very satisfied with the final result of my research. In fact the three months I spent immersed in the country of Laos and the area of foreign aid using tourism as a tool for development have caught onto me so much that it is the path I can see myself going down in the future. Writing this dissertation was definitely challenging. Living in a foreign culture and trying to understand it while searching for information on such a complex field of tourism was highly demanding. Luckily I have had many people supporting me without whose help it would not have been possible to achieve this result. I want to thank all interview respondents who have been extremely cooperative providing me with valuable information and making it possible for me to get a deep insight into this sensitive topic. Without their openness and frank responses I could not have gotten the results I did. A big thanks also goes to my supervisor, Carin Rustema, who supported me throughout the whole research period. Her constructive criticism hit me in the right spots and pushed me to give my best. Finally, I want to thank my friends and family for being there for me whenever I needed them and encouraging me to keep going even when I felt that I could not finish it on time. Their strong support reached me also at points where I was halfway round the world for which I am eternally grateful. It has been a great year with the TDM students with lots of learning experiences and unforgettable memories. Most importantly we formed friendships that will last. Nadine Fiaux I EXECUTIVE SUMMARY BaCkground: What defines the effectiveness of foreign aid involvement in tourism policy? The answer is not easy as foreign aid involvement and the donor-recipient relationship are complex issues. Tourism policy is an important aspect of destination management as it can greatly influence the future of a destination which seems especially important for developing countries. The policy process is a topic widely discussed and it becomes apparent that it has an inherent set of challenges. Due to a lack of funding and expertise foreign aid can play an important role in policy of different industries in developing countries which can make them dependent on donor funds. Tourism is an area with high aid involvement as it is recognised as a tool for development and donors can greatly influence the way in which tourism is managed and with this tourism policy. It is likely that the involvement of foreign aid poses certain challenges for recipients. It would therefore be beneficial to give guidance for management to raise awareness among donors and recipients such that the relationship and the policy process can be improved. This report aims at filling a gap in the literature since the involvement of foreign aid in the tourism policy process and the effects of the donor- recipient relationship have not been researched before in this manner. ResearCh ObjeCtive and Questions: Based on the context of the research problem the research objective for this study and research questions have been formulated as follows: Analyse the effect of foreign aid involvement in tourism by assessing the impact of the donor- recipient relationship on the tourism policy process using the case of Lao PDR. 1 What role does foreign aid play in tourism policy and planning and destination management? 2 What characterises the relationship between donors and the recipient country? 3a Where (and how) does the donor-recipient relationship manifest itself in different aspects of the policy process? 3b In the case of Lao PDR how does the relationship between donors and recipient affect the policy process? 4a In the case of Lao PDR what areas for improvement can be identified to enhance the relationship and the policy process? 4b What are main areas for change to enhance the donor-recipient relationship making for a mutually enhanced policy process? Methodology: The choice of methods for data gathering was based on the exploratory nature of the study. Secondary research was used to build a theoretical base of knowledge on the donor-recipient relationship and to gather information on the case. Primary research was based on a case study approach. Lao PDR was judged appropriate due to its representative characteristics of a developing country with high foreign aid involvement in tourism and in the policy process. Semi-structured interviews resulted in the gathering of qualitative data allowing for thick descriptions of a previously under-researched topic. This made observation and interpretation throughout the conversations possible giving indications of the intentions of interviewees. Interpretive methods were used for data analysis as the importance of meaning within the politically sensitive donor-recipient relationship was recognised. Subjects were identified through secondary research and snowball sampling by initial interviewees. They included donors, recipients as well as ‘outsiders’ giving objective views on the topic. Alternative research methods such as participative observations were used and triangulation was applied to ensure the validity of qualitative findings. II ConClusions: A main conclusion of this dissertation was that the donor-recipient relationship is the dominant factor that determines whether aid initiatives are effective or result in failures. Given this huge importance it is surprising that this aspect has not gotten more attention in the literature and this study therefore makes a call for giving more consideration to researching this crucial relationship and its facets. The different aspects defining the donor-recipient relationship found in the literature were grouped into four main characteristics for this report. These are politics, priorities, power and commitment, all of which are interdependent and have an impact on the policy process. Politics mostly sets the boundaries for the relationship and defines the nature of effect on the policy process. Priorities can be harmful if there are clashes between recipients and donors. Power defines the proximity of the relationship and whether it is equal while commitment is crucial for its continuous stability. Their importance changes throughout the policy process indicating that they all have to be managed continuously and their effects recognised by both parties to make the relationship most effective. The links between the relationship characteristics and the steps of the policy process makes this a highly complex task. Three main areas have been identified which are affected by the nature of all four characteristics and define the effectiveness of the relationship. A lack of coordination can be harmful to recipients and donors by diverting attention and reducing leverage. Differing priorities lead to misconceptions and conflicts and hamper the success of inducing policy change. A lack of partnership building between donors and recipient leads to a dominated relationship reducing the benefits for both as recipient learning is reduced and policy changes are not adopted. If these aspects are not considered they will stand in the way of turning a tangled affair into a fruitful relationship to render it more effective. ReCommendations: The recommendations provided are based on the